Hello everyone and Welcome once again to another episode of Selling Greenville your favorite real estate podcast here in the upstate of South Carolina I'm your host Stan McCune realtor here in Greenville Greer Spartanburg wherever you can think of here in the upstate of South Carolina I work in that market and as you can know from all my other episodes you can find all my contact information in the show notes just reach out to me however is easiest for you if you want to discuss real estate want to discuss a podcast anything like that I am available for you and as well if you like the show if you love the show please leave a rating hit that five star button Apple has changed it recently you might have to scroll down a little bit to find it I'd appreciate if you could leave me a review for this show as well that helps to to get out to more people and yeah I just appreciate if you guys could do that today we are going to talk about the rental property market for landlords and the and the perspective of people either entering or exiting the real estate rental market and this is very interesting because it it's very clear that there are now kind of two factions forming and these aren't really factions that are forming that are like liberal or conservative or anything like that these are factions within the landlord Market that are they they are political to an extent but they're not political as in right or left but they are coming to opposite conclusions at the same time I think it's important to clarify for a second that at least here in Greenville and part of this may be the demographic of Greenville but a lot of the landlords in this area do tend to be more right leaning a lot of more progressives actually hate landlords for whatever reason on the extreme side of things I don't mean on on the Practical side of things obviously there's the neoliberal camp which of course I'm I'm not going to get into too much of this but there are more capitalist leaning progressives of course plenty of them that's that's the majority of them but on the extreme side of progressivism landlords really have a dirty name and and there's a belief that even in some circles that landlords shouldn't exist which is kind of an absurd conclusion to come to in my opinion but that's an opinion that some people have the majority of the landlords that I communicate with are more conservative leaning they're more capitalist leaning and that's for obvious reasons because when you're landlord you see in real time the impact that more socialist type of decisions that the government makes how that directly impacts not just the landlord but also the tenants and ultimately nothing impacts the landlord that doesn't also impact the tenants there is a they are connected at the hip because as you see more expenses come on the landlord that landlord has one of two options options either that landlord has to raise rent on his tenants on or on her tenants or that landlord must sell the property to someone else and for that person to be able to justify the purchase they have to be able to get money back in one way or another so often times what happens is when the property changes ownership oftentimes the new owner wants to try to get rents raised in some way and often times that means the tenants get to point where they can't afford it anymore they have to get evicted or whatever the case may be and then it it gets you know in a situation where it's a it's a lose lose right the tenant loses their housing situation that they had they might have been in there for years they no longer can be in there the new owner has to have higher vacancy rates and has to figure out you know has to make a bunch of improvements in order to justify the price increases and it's just a ripple effect that happens so we have to we have to start by understanding that that everything negative or positive that happens to a landlord gets passed in one way or another to the tenant so all that to be said in the background here the past one and a half years all right really you know going back to the start of covid has been quite the roller coaster for landlords I mean that's an understatement and I know this from firsthand experience I am a a landlord I don't manage my properties but I own rental properties and it's it's been quite the roller coaster it's been obviously eviction moratoriums and now there's a big debate because the CDC just renewed their eviction moratorithe Supreme Court made passed a ruling on the slimmest of margins 5 to four that the CDC was allowed to have an eviction moratorium last year but but just Kavanaugh who ruled in favor of that said that if the CDC attempted to do that again and it was brought to the Supreme Court that he would not be in favor of that and that he would want it to be passed legislatively through Congress well guess what the CDC just extended it again there are States now suing and it it seems likely that that the CDC will be overruled on this but but the trend it's a very interesting Trend about how now it used to be very local it was always very local the rules for landlords the rules for tenants but there is increasingly a threat of the federal government trying to take it over and of course this is way out of the CD the CDC in my opinion should not be telling landlords anything that is completely it's a Center for Disease Control what are they focused on with with who's renting and and what the rules are for renters they have no business that they don't have any idea what's going on in that Marketplace and they have no business ruling on that that should be something that's done legislatively and so I think that that's that's absolutely out of control of course that impacted a lot of a lot of landlords it did not personally impact me I'm grateful for that but I do know that there are a lot of landlords here locally as well in Greenville that were impacted negatively by the eviction moratoriums Additionally the past one and a half years as most if not all of you know construction costs have skyrocketed and it's just been kind of a crazy time as both supply of construction materials went down but demand went up and so we saw some things tripling quadrupling in prices and still a lot of that has not leveled out and it's just a strange situation where you know Lumber Mills were shut down and different things like that were deemed basically non-essential during covid but then guess what everyone's you know in quarantine you know sitting at home thinking okay I'm spending way more time at home than I ever have I want to improve this place and so they're going out and buying even more Construction Supplies than they ever have to do more improve in their home and and so we had this crazy situation where there's less things to buy to improve your home than ever before but more buyers looking to buy those things and so that caused a lot of Chaos in terms of people renting trying to improve the the rental properties that they have not to mention as well with all that demand you know a lot of people are not doing these projects themselves and so what happens you know when they need to hire someone to do a project there's shortages of Labor as well and so it's hard to get contractors it's hard to get subs out to your property because those shortages exist as well and so then the cost of Labor also goes up and and then you've got you know tenants getting stimulus checks and these some of these tenants aren't paying their rent because they they have an out with the with the eviction moratoriand but they're getting stimulus checks and instead of taking those checks and and paying their rent they are instead buying smart watches and things like that and I'm not saying that everyone is doing that but I've heard plenty of stories of this types this type of thing happening where tenants have stopped paying rent and they're they've got more money really than they ever have because of all the government stimulus but they're choosing to spend it on frivolous things rather than trying to get caught up on their rent and and it's going to be difficult when for a lot of tenants when they are finally allowed to be evicted how are they going to get caught up on their rents these ones that have gotten really far behind it's going to make it very challenging so all that to be said is well let me back up for second in addition to all of that so those are all on the federal level things things on the federal things on the on the Countrywide level but in addition to that we've got the state of South Carolina and Greenville County specifically which we've talked about in the past has a really inequitable property tax standard whereby landlords end up footing the bill for the public schools in our area and that's kind of a a strange system because landlords don't benefit from the public schools you know you typically people typically pay taxes for things that they benefit for well landlords aren't going to public school landlords aren't sending you know their kids to the public schools of their rental properties they the people I I believe and a lot of people believe that you should pay for the public school that you're zoned for and that's it and and only if you have an opportunity to send children to that public school if you've got rental properties scattered all throughout the place and you're paying for you're paying property taxes for those rental properties it shouldn't be footing the bill for the public schools and and so that's something that even our governor here in South Carolina has said that he wants to look at the difficulty there as we've talked about in the past on this podcast is well if you if you take away all that money somehow you've got to find a different way to to pay for these public schools and so I don't anticipate that that's going to change anytime soon but unfortunately that's put the squeeze on landlords which again as I alluded to before puts the squeeze on tenants rental properties end up costing about three times as much in terms of property tax as owner occupied properties and that is because of this inequitable property tax standard and on top of it all I mentioned so that's a state thing but Greenville County specifically has gotten extremely greedy in terms of their reassessment of property values and and they see something happening here that they want to get in on and and this is the way all governments are even in Greenville which is considered a more small government area listen when any government sees an opportunity to get more tax revenue they are going to jump on that they are absolutely giddy at the prospect of gentrification that's a that's kind of a bad word in a lot of circles but guess what at the County office they love it they love to see these housing affordability go down because as housing affordability goes down that means that they can raise property taxes on people and so there is a moral hazard we always talk about housing affordability with our with our local politicians but getting them to actually be concerned about affordable housing is a is a tough sell because they get more money coming into those County coffers when housing becomes less affordable because then they can reassess at a higher price and justify it and now you've got a situation where the county is bringing in more money because the the cost of housing is going up but it's putting the squeeze on so many people and it's a and it's a a terrible thing in a lot of ways and and it just it gets worse because as those prices go up fewer people can buy but then as the the property taxes then get get raised along with the prices of the houses going up the property taxes get raised and and so then those landlords end up having to increase rent in order to be able to even stay afloat people think landlords have tons of money they don't talk talk to a few people that have rental properties these most of these people are Mom and Pop landlords that don't have a lot of money and maybe they shouldn't be landlords that's a whole another discussion for a whole another day but the point is that the the state and the county is not taking they're assuming that landlords are are all super wealthy you know super wealthy investment groups based out of New York and the majority of them are not the majority of them are just normal people like me and you just living here in South Carolina that are just trying to have some rental properties in our Investment Portfolio and the county just basically runs over all of us and so there is all of this I'm painting a pretty Grim picture right for for owning rental properties because this is a grim picture that has been painted for me the past year I've heard a lot of angst from people that own rental properties that are like what is the future of this going to look like I mean should we exit all together and I've seen some people start to sell off their rental properties because they're just like I don't want to be a part of this future this future of you know the feds telling me what I can do with my rental properties and the and the FEDS not holding tenants accountable and all these other things and the and the county of course you know having no checks and balances in terms of of what they can do on on taxing landlords and their properties but this year so that was that was last year I really started to hear a lot of that angst but I have heard a really different twist this past year and a and a different faction emerge this faction was not around last year at least I did not deal with them but during the Biden Administration this faction has become very prevalent and the second faction basically sees the concerns that we've mentioned thus far but they see even bigger concerns in the opposite direction they see concerns about hyperinflation coming down the road with the Biden Administration basically spending money that we don't have that money has to be paid for in some way either you can raise taxes on everyone which is very unpopular or you can do a secret tax which is just inflating the the the dollar just printing more dollars to spend for for all of these different projects well that's a tax that we all end up paying as our dollar becomes less valuable we all know that wages don't keep up with with the devaluing of the dollar so if if the dollar goes down in value by 1% in a given month you're you know your salary doesn't go up by 1% in that month you're it takes a while for that to get readjusted and it never keeps up up additionally funny things happening in the stock market you know we've heard about meme stocks and and just a lot of speculative things happening I and again let me get out in front and just say I'm no financial planner I'm not a financial adviser nothing that I'm saying on here constitutes Financial advice talk to a financial adviser for that but but this is just what I've heard from other people saying there's a lot of funny stuff happening in the stock market I'm a little bit concerned about what I have in there and and and my lack of diversification in terms of I've got too many eggs in that stock market and that Wall Street basket additionally what's become really popular among people that tend to be into real estate is the cryptocurrency market and and I am no expert on cryptocurrency by any stretch but I think pretty much everyone expects that there is going to be some major crackdowns on cryptocurrency and on Trading looming and actually there's a big debate right now going on about it again I'm not very knowledgeable about that I just know that that is a major major concern among a lot of people that trade crypto is that the government is going to come in and and really kind of have a hostile takeover of that market additionally meta concerns again these are all just concerns I'm hearing from this other faction this other faction that that is emerging just meta concern concerns about the US economy and the and the fact that it appears to be lagging behind other economies particularly China what does that mean is a recession coming are we in a bubble not not a real estate bubble specifically but a a just a economic bubble as a whole and what is that going to do again to their Holdings in the stock market in equities in crypto all these other things and and the here's where the people that have all of those concerns here's the clusion that they're coming to they're coming to the conclusion that real estate is much safer than all of these other things if I have rental properties I am in a much safer position than I am if I have all of these other Holdings and all of these other things that are so much more volatile because you know people always need a place to live and traditionally real estate has been considered a very safe place to put your money because real estate does tend to appreciate at least on par with with the rate of inflation and here in Greenville it's tended to significantly outpace inflation typically and so that's something that that that's the conclusion that I'm now seeing a lot of people come to so whereas last year I was hearing all these people saying man I I think we need to to exit some of some of this real estate that we have some of these real estate holdings we have now I'm hearing a lot of people saying okay I don't have nearly enough real estate I need to to park some money in that at least temporarily at least to kind of get through the next few years see what happens you know after theoretically after Co is gone I mean who who knows when we'll be able to say that but they're they're concerned that this Administration is just spending while spending all of the money of the common folks while also then putting regul on things that hurt common people just average everyday Joe's the most and so U I was talking to someone just recently just this past week about this who is trying to move out of some of some of his you know stocks and equities and things like that and trying to purchase more real estate and I was joking with him he should find a way to trade some of his Holdings that he has in that market trade it with someone who's in a situation where they have feel like they have too much real estate and are trying to diversify in the opposite direction because we do have these two very different camps that have emerged and if only there was a way that they could just trade with each other of course if the government ever found out about that they would freak out obviously that's that's not how this is supposed to work but that was just something that you know I had I had a good laugh with someone about that this week so what is a fair Middle Ground where where do we go what do we do with all this information with all these conflicting opinions all these different ideas about what's happening what's the future of the country what's the future of the economy and and I think we need to distill it all down to the core of what this debate is about the core of this debate is over how safe an investment is how safe is is an investment is your investment in the stock market safe is your investment in real estate safe is your investment in crypto safe how safe is that investment and as I said before real estate has always been considered an exceptionally safe investment now what happened with last year people started to see some some chinks in the armor so to speak of that of the safety of that real estate investment they started to see okay it's not as safe as it once was now we're starting to see that okay whereas in the past if we had a tenant that wasn't paying we could evict that tenant and we could turn that property that's nonperforming into a performing property again well some of that went away last year with the eviction moratoriums and some of the other things that were happening and you know now locally here in Greenville specifically we're starting to see and and I'm hearing this more and more that it's like okay you know again the property tax problem is is a real problem you know at what point is it going to to be that I get taxed so much to a point where I can no longer raise rents on people that that they just can't afford this property and I can't afford to keep it then what then then what do I do you you there has to be a Tipping Point there has to be a tipping point at which it's no longer financially feasible for someone to have a rental property with all this overhead and to be able to charge that amount to the tenant and so that is the concern over okay real estate is typically a very safe investment but there are some things now that are a little bit more volatile that need to be considered and so the question is now whether the safety that rental real estate affords even after the beating that it's taken during the co during covid whether whether that safety perhaps is is has been Whitted down to a point where it's no longer safe enough or whether all these other meta things that are happening actually mean the safety of real estate is even more important than it's ever been and and this is a a great question and it's it's one that deserves some really serious consideration and and I'm not going to sit here and tell you what my opinion is because my opinion is F first off again I have to be careful with with offering Financial advice but I have kind of mixed feelings on this I can see both sides of it and and I personally believe that you know the way I handle my own finances and my own Investments that there should be diversification that there should be a little bit here a little bit there a little bit all over the place and I have loved real estate Investments as a whole but there are some major concerns that need to be considered and that need to be that need to be addressed when it comes to this you have to make sure that your numbers work you have to make sure that your properties are performing and you have to do your best in order to in in order to ensure that a rental property isn't just doing well now but will continue to do well in the future there are some strategies that that come into play there I I think that the cost perd door strategy is a good one making sure that you're not overspending on a perdo basis it can be a little bit challenging to have a bunch of single family homes that are rental properties because single family homes cost a lot of money if you can buy multif family that is in a lot of ways the way the way to go because you can get multiple doors cheaper than you can if you're just buying a bunch of houses however the single family Market has some opportunity in in short-term rentals with Airbnb and and things like that but again you have local government concerns where where you know the City of Greenville doesn't like Airbnb properties they want those to be taxed as hotels etc etc and so there's a lot of a lot of considerations there and of course obviously we don't want to see more federal government involvement in real estate that's definitely something that we need to to monitor because the state and local government involvement that we have is is bad enough right we we don't need all these layers of involvement in rental properties but at the same time what happens if these hyperinflation concerns proved to be true what happens if we we reach a point where just the the currency has just been devalued so much and it's like okay basically what I own is just losing value constantly but real estate does not real estate typically holds its value so that is is a major factor a major concern that is worth considering what if what if the currency gets devalued to the point that we Plit into a recession th these are the concerns that I'm hearing from people and perhaps they're alarmist perhaps you know we've heard a lot of these concerns for a long time I used to work with someone that that hoarded gold and silver like actual bars of of gold and silver and and and there are people out there like Peter Schiff that that certainly believes that as well and you know he has been sounding off these alarms of hyperinflation for years and years and it hasn't happened the way he anticipated that it would happen and so but there's got to be a point at which it does happen right and so we have to keep all of that in mind and time will tell obviously I think we have to be careful and and make sure that we get into the right the right properties make sure that we make the right decisions take everything into account take into account what the what the federal government is doing take into account what the local government is doing so taxes are going up right property taxes are going up what do we do about that well South Carolina has a program called ATI accessible transfer of interest you can Google that it's a way if you're purchasing investment real estate to try to avoid it can help you to get your your reassessment amount lowered I I think by as much as 25% I'm not an expert on that do your own research on that as well another good strategy that a lot have employed purchase a property that needs a lot of work purchase it cheaply do all the work yourself the county is less likely to reassess you at a at a higher price point because they can't account for all the work that you've done they're they're not that organized perhaps at some point they will be but they tend to go more off of the sales price than off of the work that you've done so you're less likely to get reassessed at a higher rate if you're purchasing something cheaply and then renting it out so there's a a lot of different a lot of different things that can be done a lot of different considerations but at the end of the day you have to consider the risk and the reward of real estate investing and and decide what camp you're in and and maybe there's wisdom in both camps maybe you're not the camp that's like I'm going to exit all of my real estate but maybe you're not the camp that's like I need to buy up as much real estate as possible a lot of people find themselves in the Middle Ground I think that's where I find myself for the most part it's so a fluid situation we'll we'll we're still early on in the Biden Administration so we're still figuring out all that they are going to to do all that they are planning to do which may hurt real estate or it may make real estate even more of a safe haven than it was before so that's it for today's episode I hope you guys liked it I hope you guys have a great rest of the week looking forward to to communicating with many of you so reach out my contact information is in the show notes I'd love if you could leave me a rating or a review as always until next time stay safe [Music]